Employment Law Newsletter – January 2012

Welcome to January’s edition of our employment law newsletter, keeping you up to date with changes in employment law, and informing you of recent case law developments.

Consultation launched on Tribunal fee structures

The Ministry of Justice launched a consultation in December to seek views of two proposed charging structures for fees in the employment tribunal.  The first option includes an issue fee and a hearing fee, the value of which would be determined by the nature of the claim.  The second option is to charge an issue fee only, the amount of which would be dependent upon the value of the Claimant’s claim (as valued by the Claimant).  The consultation will close in March 2012.

2012/2013 Annual Compensation Limits

In December, the Department for Business, Innovation and Skills announced the new compensation limits which will take effect from 1st February 2012.  The key changes are that a week’s pay will be increased from £400 to £430, and the maximum compensatory award will be increased from £68,400 to £72,300.

Revision of statutory payment announced

The Minister of State, Department for Work and Pensions announced on 12 December 2011 that the following increases are proposed to statutory benefits with effect from April 2012:

  • Statutory sick pay will increase from £81.60 per week to £85.85, with the lower earnings limit increasing from £102 to £107.
  • Statutory maternity, paternity and adoption pay will increase from £128.73 per week to £135.45.  The lower earnings limit for these payments will increase from £102 to £107.
  • Maternity allowance will increase from £124.88 to £135.45, with the earnings threshold remaining at £30 per week.


Employee’s duty of confidentiality

The High Court held in Customer Systems Plc v Ranson, Atherton, Edmond and Offland that an employee who becomes aware of confidential matters relating to competition from a potential new employer is under no obligation to pass this information to his existing employer, as this would mean he would be in breach of confidence to his new employer.  A duty of fidelity to an existing employer would not necessarily defeat a duty of confidence to a new employer.

Working Time and Annual Leave

The Supreme Court has held in Russell v Transocean International that entitlement to annual leave can be satisfied during periods when employees are not otherwise required to work.  This resulted in an oil and gas industry worker who worked offshore for two weeks, followed by onshore for two weeks, being obliged to take their paid annual leave during the onshore periods.

Taxation of bonuses structured as dividends

The Court of Appeal held in HM Revenue and Customs v PA Holdings Limited that where bonuses were structured as dividends in an attempt at tax avoidance, they were taxable under the income tax provisions, and not the dividend provisions.

Sickness absence dismissals

In Dundee City Council v Sharp, the EAT has set aside the decision of a tribunal which held that an employer’s failure to carry out a reasonable investigation resulted in the unfair dismissal of an employee on long term sick leave.  The tribunal has erred in requiring the employer to investigate beyond the employee’s assertions that he was not fit to return to work.  While length of service is a relevant consideration in determining the reasonableness of an employer’s decision to dismiss, it is not relevant in the consideration of the reasonable of an employer’s investigation.

If you require any further clarification in relation to the above developments, or if you need any other assistance then please do not hesitate to contact our team of specialist employment solicitors on 0161 832 3304:

Shiva Shadi                      Partner

Anna Bunting                   Partner

Claire Reddington            Associate

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